Aspen Pharmacare (Aspen) tops the health-care sector in our empowerment rankings. However, after months of negotiations with an empowerment partner, Aspen put its deal - estimated to be worth about R1bn - on hold, but in terms of empowerment, the company is still ahead of its peers. Its lead illustrates how slow transformation in the health-care sector has been.
As at June last year, Aspen's interests at holding company level had included the investment arm of the Chemical, Energy, Paper, Printing, Wood & Allied Workers' Union, as well as black-owned health-care investment company Peu Health - interests that equated to about 13%.
Aspen then repurchased Peu's 7,4% stake, worth about R274m, leaving Aspen with 5,6% of its equity in black hands. At the time Aspen said the repurchase would be used to fund a bigger BEE deal.
However, the deal was postponed after the department of trade & industry's draft codes of good practice stated that the economic interest of a black partner would not count towards the calculation of black ownership if the company ceded or pledged the shares to another party - the funders, in this case - for a period of time.
Once the issue of calculating ownership has been clarified, the deal can be rekindled.
Meanwhile, Aspen has approved the establishment of a black workers' trust and a black managers' share incentive trust to provide a vehicle for its black workers to own shares.
"We want to reach people that form an important part of our business," says deputy CE Michael Attridge.
Aspen's employment equity record, with 70% of its workers from previously disadvantaged backgrounds, is also impressive. Attridge says: "We employ on merit, but seek employment equity candidates to fill the position."
The health charter should give companies in the still predominantly white health sector more direction and clarity on how to implement their empowerment strategies.
During this year there is likely to be a flurry of empowerment deals in the sector after the charter for the industry is finalised in about April.
Last year's BEE R3,5bn deal between Afrox Healthcare (Ahealth) and empowerment consortium Bidco, headed by Tokyo Sexwale, should be finalised early this year.
But much of the real empowerment may be taking place outside the listed companies - Thebe Healthcare successfully purchased Forim and Alliance Pharmaceuticals, which delisted from the JSE in September last year. There have been a number of high-profile deals in the medical scheme administration sector such as MX Health's R60m sale that transferred 60% of the company into black hands.
For black empowerment investors, though, the listed companies are still the most sought after in the sector.
All eyes are on hospital groups Netcare, Medi-Clinic and Ahealth, with a combined market capitalisation of R21,7bn. Discovery Health (through its parent Discovery Life) is also expected to announce deals in the coming year. Sales of even small stakes in these companies will greatly improve the empowerment profile ofthe sector.
The downside is that there are few established black health-care companies. And, as in other sectors, listed companies may prefer a well-known figure to a lesser known health-care group, even if it does have hands-on experience.
Still, companies such as black hospital group Clinix Holdings could be in a position to make a play for some of the deal flow. Organisations representing health-care professionals are also likely to enter the picture, offering broad-based empowerment. The Democratic Nursing Organisation of SA recently set up an investment company for possible deals with companies.
For potential empowerment partners, one of the biggest challenges is funding.
"Accessing empowerment funding is not as easy as it was a year ago," says Medi-Clinic's Louis Alberts. "A more risky regulatory environment has led to uncertainty."
In addition, health minister Manto Tshabalala-Msimang has made it clear that those private-sector health-care businesses earning excessive profits will be next on the regulation list. She has made specific mention of private hospitals.
By this time next year, it is likely that a significant portion of the health-care sector would have changed hands. It is long overdue.
